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Effect of geomagnetic activity on investors and managers: evidence from the pricing and timing of disclosure of earnings news

Sharad Asthana (Department of Accounting, The University of Texas at San Antonio, San Antonio, Texas, USA)
Rachana Kalelkar (University of Houston-Victoria, Victoria, Texas, USA)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 14 February 2023

Issue publication date: 15 June 2023




This paper's purpose was to examine the impact of geomagnetic activity (GMA) on the timing and valuation of earnings information disclosed by firms every quarter.


The authors start the analyses with a sample of 112,669 client firms from 1989 to 2018. To analyze the impact of GMA on the earnings response coefficient (ERC), the authors use the three-day cumulative abnormal returns and cumulative abnormal returns for the extended post-earnings announcement window [2, 75] as the dependent variables. The authors interact unexpected earnings (UE) with the C9 Index, an index commonly used to measure GMA and study how GMA affects the pricing of new public information. To examine the effect of GMA on the timing of disclosure of earnings news, the authors regress a variant of the GMA index on the propensity to disclose bad earnings news.


The authors find significantly lower earnings response coefficients during periods of high GMA. This effect is permanent and stock prices do not correctly incorporate the implications of earnings information over time. The authors also show that managerial behavior is affected by GMA as well and the managers are more (less) likely to release bad (good) news during periods of higher activity. Finally, the authors also find that in situations where stakeholders are likely to rely on modern technology that depends minimally on humans, the adverse impact of GMA on the pricing of earnings information is mitigated.


The literature on the effect of GMA on the capital market is very limited and focuses primarily on stock returns, while the behavioral finance literature focuses on circumstances like weather, temperature and sporting outcome to study how the investors' mood affects their capital market behavior. The authors add to both the literature by investigating how GMA influences investors' and managers' behaviors in the capital market.



The paper has benefited from comments and suggestions by Jeff Boone, KK Raman, Harrison Liu, Zhongxia Ye, Jennifer Yin, and workshop participants at the University of Texas-San Antonio.


Asthana, S. and Kalelkar, R. (2023), "Effect of geomagnetic activity on investors and managers: evidence from the pricing and timing of disclosure of earnings news", Asian Review of Accounting, Vol. 31 No. 3, pp. 387-413.



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